Examination of Witnesses (Questions 154-159)
MS DIANNE THOMPSON, MS SUE SLIPMAN OBE AND MR TONY JONES
TUESDAY 25 JUNE 2002
Chairman: Good morning. I would like very much indeed to welcome you here today. I would call you old friends if it were not that that might be interpreted as bias on my part, but we have had many occasions to meet both in here and at your headquarters. It may well be, particularly with Clare Ward—who is no longer a member of the Committee—that we might have played some part regarding the allocation of the franchise. Anyhow, we are looking at a very different series of matters this morning. Could I just make one point to you. Although the acoustics in this part of the room are pretty good, people sitting at the back of the room with your backs to them find they cannot always hear. If you could speak rather more loudly than you normally do that would be much appreciated.
Alan Keen
154. Could we start by you telling us what your main concerns are about the relaxation of the gambling laws for Camelot. It is our National Lottery and we are all concerned about that.
(Ms Thompson) Absolutely. I will start with that one, if I may. We do actually recognise that the gambling laws are quite old and needed revision. Of the 176 recommendations that were laid out in the Budd report the vast majority of those we have no issue with at all. But we were concerned because our role was obviously to maximise returns for Good Causes provided we protect the integrity of the Lottery on the way. Certainly the recommendations in the Budd report we thought would have a very significant impact on the National Lottery in terms of sales revenues and therefore the monies for Good Causes in particular.
155. I understand that one of the main concerns is the worry about people being able to bet on the results of the National Lottery as part of the relaxation. Are you relaxed about that now?
(Ms Thompson) Side betting is actually illegal everywhere apart from the Irish lottery. It would appear—although opinions do differ on this, and certainly the people who run the Irish lottery believe it—that side betting costs them about 20 per cent of their revenues. So it was very significant.
Chairman
156. Can you explain how that comes about?
(Ms Thompson) Because with side betting, if you will forgive me for taking 30 seconds out to explain what happens, you actually put a bet on the outcome of the numbers of the Lottery rather than actually enter in the Lottery. There are no jackpot prizes so you are actually winning a larger amount of money for matching three or four numbers in side betting. People who are wanting to bet and actually win cash more frequently rather than going for the dream of winning the big jackpot will go for side betting. That is what appears to have happened in Ireland. But, as I say, that is the only market place in the world where side betting is being allowed.
157. Obviously there is a great deal of psychology in this. I get the impression—and you are far more knowledgeable about this than I—that the kind of people who would do side bets would not do side bets—spend the money on side bets—as a substitute for buying Lottery tickets. Maybe you have information that would controvert what I am thinking.
(Ms Thompson) The Lottery market is always one that is very difficult to research. I should imagine that is true of all the gambling markets. In fact the analogy has been used that it was like talking to people about drinking; people admit that they do actually drink alcohol but will not often say exactly what they drink. It is very difficult to get people to give research in advance of how they would behave. We are launching some games ourselves later in the summer and that comes from a desire from some of our players to win more money for matching fewer numbers. So a large proportion of the people who play the National Lottery play for the dream of winning that big life changing amount of money. A pound to dream is how they see it. But there are people who actually do not want to win a large million pound jackpot; they just want to win more money for matching fewer numbers. That is where the risk of side betting coming comes but, as I say, there is only Ireland where it has happened so it is not proven. But that was one of our big concerns out of the Budd report.
Alan Keen
158. I know I hate to talk about the gambling mainly, but I think we are all fascinated by the change in the name of the Lottery to Lotto. Could you explain some of the background as to your thoughts on the change in name and the new games you are introducing?
(Ms Thompson) When Camelot launched the National Lottery in November 1994—I was not there at the time—the decision was taken not to call the main game Lotto because it was felt that it would be very confusing for the general public to have two things launched on the same day, the National Lottery then a game called Lotto. Hindsight is a wonderful thing; I am not sure that was the right decision at the time. Eighty-five per cent of the world's lotteries are called Lotto. But the problem we have had by having the game and the National Lottery called the same thing is that it has been very difficult to differentiate for our players when we have been talking about the benefit that comes from the National Lottery, the money that goes to Good Causes. As you will be aware, to date we have raised over £11.3 billion for the Good Causes. It is very difficult to talk about the good that the National Lottery does when you are aggressively trying to promote the game as well. We decided—and it was in our bid when we submitted our bid in February 2000—that we needed to separate the architecture so that the National Lottery comes to mean the good that comes to Britain from people playing the Lottery, and then Lotto becomes one of the games as Thunderball, Lotto Extra and games that we will be launching later this year which we call Lotto Hotpicks.
159. Before the decision was made to award the contract to Camelot, things had not gone quite as well as you expected at the time. I do not blame you for making optimistic statements, of course. What do you think were the main reasons for that?
(Ms Thompson) I think there are two part answers to that. The first, if I take sales falling for the last four years—which they have—the good news is that the rate of decline has stabilised. There is no doubt that the delay in the bid process itself had a resultant impact on Camelot once we had won; that had a significant part. I think most people do not perhaps realise that I had 31 per cent attrition in the company last year. I was running a company that should have had 925 people; we had 600 because we lost over 300 who thought they had lost and obviously had mortgages and needed a secure income. I had 600 people running the business at the same time trying to recruit 325 and doing all the interviewing, training and induction. Last year was very much a year of catch-up. On top of all that, as you probably remember, we had to install 25,000 new terminals. We also did our software transition system on 21 January this year. I have said all along that although the delay in the bid process was about 7 months in actual time I think it cost Camelot 18 months (and the National Lottery as well). Although we were still running the Lottery and still putting our plans in place, the delay had that impact on us. If you look at the Lottery itself, most of the lotteries around the world follow a very similar pattern to how we have gone. In fact, I have been doing some comparative statistics for something else that we are doing and the National Lottery game Lotto had declined 18 per cent since it was launched. Most other lotteries in the states have declined about 30 per cent in that same time period. We can submit the figures later if you would like to see them. That is the sort of natural curve. Then, what tends to happen elsewhere is that other lotteries launch games which are not available to us in the UK because the Government has decided that those are the rules we should play. So things like video lottery terminals, Keno sports betting, those are the usual ways in which most lotteries would actually regrow their business. We do not have that so what we have got are other lottery games and marketing. It just takes that much longer to be able to do it with that.
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